DWP Granted New Powers to Access Bank Accounts in Benefit Fraud Crackdown
The Department for Work and Pensions (DWP) has been granted significant new bank account checking powers as part of a broader government initiative to clamp down on benefit fraud and error. These powers, established under the Public Authorities (Fraud, Error and Recovery) Act 2025, empower the DWP to compel financial institutions to verify the eligibility and entitlement of benefit claimants by examining their bank account details.
What the New Powers Entail
Under the new legislation, the DWP can require banks to check specific financial information, such as the amount of money held in savings or patterns of spending abroad. For instance, claimants of Universal Credit are typically not allowed to have more than £16,000 in savings, while those receiving Pension Credit cannot be abroad for more than four weeks. The DWP will collaborate with the 15 largest banks in the UK, including major names like Barclays, HSBC, Halifax, NatWest, and Santander.
However, it is crucial to note that the DWP will not have direct, real-time access to individual bank accounts. The department will not be able to log into accounts or monitor daily transactions and spending habits. Instead, banks will flag potential issues to the DWP, which will then conduct a more thorough investigation. The DWP has emphasised that benefit decisions will not be made solely based on bank account data, ensuring a balanced approach.
Recovery of Funds and Covered Benefits
In certain cases, the DWP will also have the authority to recover money owed by benefit claimants directly from their bank accounts without needing a court order. This measure aims to streamline the process of reclaiming overpayments and reducing administrative burdens.
The new powers apply specifically to three key benefits:
- Universal Credit
- Pension Credit
- Employment and Support Allowance (ESA)
Notably, the state pension is not included in this list, meaning it remains unaffected by these changes.
Implementation and Safeguards
Although the new rules have become law, they will not be implemented until an official Code of Practice has been developed. A public consultation opened in December 2025 and is set to run until February 27, 2026, allowing for input and scrutiny from stakeholders and the general public.
The DWP estimates that these powers will save taxpayers approximately £1.5 billion over the next five years by helping to reduce benefit fraud and error. A DWP spokesperson stated, "We have introduced major reforms to ensure people are paid the correct benefits, to recover overpayments and to help save billions of pounds for the taxpayer. The powers in the Fraud, Error and Recovery Act have numerous safeguards and will be independently overseen. We will not have access to claimants’ bank accounts when checking they are receiving the correct benefits."
The department is forecasting an ambitious reduction in fraud and error levels to 2.8% by 2028-29, which would be the lowest level since tax credits were introduced in 2003-04.
